Test bank for entrepreneurial small business 5th edition by katz

TEST BANK FOR ENTREPRENEURIAL SMALL BUSINESS 5TH
EDITION BY KATZ
True / False Questions
1. The majority of new firms go through similar startup processes with those most likely
to be successful following a four-step process: Finance, Construct, Promote,
Demonstrate.
True

False

2. The three most popular types of rewards for small business owners are personal
growth, building wealth, and creating products.
True

False

3. In order to make profits from a small business, the company needs to make an actual
product.
True

False

4. Truly entrepreneurial businesses are characterized by imitativeness in their products,
services, or business models.
True

False

5. Self-employed persons are not referred to as entrepreneurs.
True

False

6. Crowdsourcing is the degree of attention your target market pays to your idea or
organization.
True

False

7. Small businesses start small but are intended to grow rapidly, often requiring a team
of partners.
True

False

8. Lifestyle or part-time firms typically provide enough profit or salary to supplement an
income but usually not enough on which to live.
True

False

9. If you don't succeed the first time, try, try again. This is called the strategy of selfefficacy.
True

False

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10. High-growth ventures are also known as main street businesses.
True

False

11. Flexibility rewards refer to the money made from owning a business.
True

False

12. Flexibility rewards are the most rapidly growing type of reward.
True

False

13. Using low-cost or free techniques to minimize cost of doing business is referred to as
bootstrapping.
True

False

14. Ninety percent of all new businesses fail within two years.
True

False

15. The most frequently occurring element of the BRIE model is intention.
True

False

16. In the BRIE model, exchange refers to moving resources, goods, or services to others,
in exchange for money or other resources.
True

False

17. The disadvantage of the BRIE model is that it does not mention the management of
resources.
True

False

18. One of the seven key strategies of the entrepreneurial way involves effectuation or
an approach used to create alternatives in uncertain environments.
True

False

19. High-growth ventures and big businesses generally do not succeed without small
businesses offering supporting services.
True

False

20. Entrepreneurship levels are very high in efficiency-driven economies.
True

False

21. The primary focus of corporate entrepreneurship is creating new civic organizations
which are financially self-sufficient.
True

False

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Multiple Choice Questions
22. The _____ is a U.S. government agency that helps people start a business and also
provides them support and advocacy.

A. Small Business
Administration
B. U.S. Department of Business
Development
C. U.S. Department of
Commerce
D. U.S. Entrepreneurial
Administration
23. Truly entrepreneurial businesses are characterized by:

A. the franchise they are associated
with.
B. the degree to which their products are
imitative.
C. the novelty in their products, services, or business

models.
D. the ease with which their product is accepted by the
buyers.
24. Small businesses are usually:

A. imitative in
nature.
B. characterized by the novelty of their
products.
C. the same as high-growth
ventures.
D. not affected by market
fluctuations.
25. Which of the following is true of a franchise?

A. It is the international term for all small
businesses.
B. It is a type of novelty
organization.
C. It is an organization that provides loans to start small
businesses.
D. It is a prepackaged business bought, rented, or leased from a
company.

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26. A person who becomes an owner by inheriting or getting a stake in a family business

is known as _____.

A. a
founder
B. a
franchisor
C. an
heir
D. a serial
entrepreneur
27. A business owned by an individual or a small group is referred to as a(n):

A. corporate
chain.
B. conglomerat
e.
C. concer
n.
D. independent small
business.
28. A business run by the individual who owns it is referred to as a(n) _____.

A. franchis
e
B. owner-managed
firm
C. professionally-owned
business
D. novelty
firm

29. Which of the following is true of a small business?

A. Its preferred funding source is other people's
money.
B. It sells more when it is facing
bankruptcy.
C. It considers sales as more important than
marketing.
D. It focuses more on effectiveness than on
efficiency.

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30. Small businesses differ from high-growth ventures in that in small businesses:

A. the focus is on effectiveness rather than
efficiency.
B. the preferred source of funding is the owner's own money rather than other
people's money.
C. the delegation of responsibilities is easy and necessary rather
than difficult.
D. the metastrategy is for novelty rather than
imitation.
31. High-growth ventures differ from small businesses in that in high-growth ventures:

A. the focus is on efficiency rather than
effectiveness.

B. the preferred source of funding is the owner's own money rather than other
people's money.
C. the human resource system is personalized rather than
professionalized.
D. the limitation of growth is dictated by market response rather than the owner's
loss of control.
32. According to the text, the definition of a ________ is one that involves 1-56 people and
has its owner managing the business on a day-to-day basis.

A. franchis
e
B. small
business
C. unicor
n
D. high-growth
venture
33. Which of the following is true of a high-growth venture?

A. It considers sales as more important than
marketing.
B. Its metastrategy is
novelty.
C. It focuses more on efficiency than on
effectiveness.
D. It does not allow for easy delegation of work or
responsibilities.

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34. A person's belief in his or her ability to achieve a goal is called:

A. growth
rewards.
B. bootstrappi
ng.
C. novelt
y.
D. selfefficacy.
35. Which of the following is a difference between a small business and a high-growth
venture?

A. For a small business, the preferred funding source is other people's money,
whereas for a high-growth venture, it is the owner's own money.
B. For a small business, the personal control preference is to involve others, whereas
a high-growth venture prefers to retain autonomy.
C. A small business focuses on effectiveness, whereas a high-growth venture focuses
on efficiency.
D. A small business grows when necessary, whereas a high-growth venture grows
when possible.
36. High-growth ventures:

A. use imitation as their
metastrategy.
B. start small but are intended to grow
rapidly.
C. cannot include a team of

partners.
D. do not delegate
tasks.
37. Which of the following describes the significance of an overall growth strategy?

A. It represents a driver of the variety of
entrepreneurship.
B. It allows for one small business enterprise to incorporate in multiple states at
the same time.
C. It provides the owner a stake in the family
business.
D. It helps buyers to get familiar with new
products.

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38. Which of the following is a characteristic of a lifestyle firm?

A. It starts small and grows very rapidly to become a big
business.
B. It represents about 20 percent of all
businesses.
C. It typically has sales of $25,000 a year
or less.
D. It aims to achieve growth rates of 25 percent or
more a year.
39. Which of the following is true of a part-time firm?

A. It starts small and stays very
small.
B. It has a continuous
growth.
C. Its success is defined by annual profits of
$1,000,000.
D. It aims to achieve growth rates of 25 percent or
more a year.
40. The text defines an entrepreneur as:

A. a person who purchases an existing
business.
B. working for
yourself.
C. characterized by being different or
new.
D. a person who owns or starts an organization, such as a
business.
41. Which of the following categories does the majority of small businesses fall under?

A. High-growth
ventures
B. High-performing small
businesses
C. Lifetime/Part-time
firms
D. Traditional small
business

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42. _____ are the smallest full-time business.

A. High-performing small
businesses
B. Traditional small
businesses
C. High-growth
ventures
D. Lifestyle
businesses
43. Which of the following is true of a traditional small business?

A. It is usually a multi-site
business.
B. It generally has sales between $100,000 and $1,000,000 depending on
the industry.
C. It defines its schedules based on customer
needs.
D. It follows a continuous growth
curve.
44. Which of the following terms is not one of the four steps in the successful
entrepreneurial process?

A. Seek
.

B. Do
.
C. Plan
.
D. Check
.
45. Smart entrepreneurs check the likelihood for success of their idea through feasibility
analyses or customer development processes, repeating these until they have a
winning and saleable idea. This is done during the ______ step of the entrepreneurial
process.

A. Pla
n
B. D
o
C. Chec
k
D. Fee
l

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46. Which of the following is true of the growth of a typical traditional small business?

A. It tends to quickly level off after the owners operate long enough to learn the
basics of making money.
B. It levels off after operations settle into a consistent, money-making pattern

generating income to provide a living for the owner.
C. It grows at rates between 5 to 15 percent
a year.
D. It grows at rates of 25 percent or more
a year.
47. _____ tend to level off after success defined by sales of between $100,000 and
$1,000,000, depending on the industry.

A. Lifestyle
firms
B. Traditional small
businesses
C. High-performing small
businesses
D. High-growth
ventures
48. Which of the following is true of a high-performing small business?

A. It often grows through multiple
locations.
B. It aims to achieve growth rates of 25 percent or
more a year.
C. It has sales of more than $1
million.
D. It has low levels of
professionalization.
49. At the tip of the high-growth ventures are firms called ________, like Uber and AirBnB
with valuations of $1 billion or more.

A. green

entrepreneurs
B. main street
businesses
C. unicorn
s
D. necessity-driven
entrepreneurs

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50. Lifestyle firms, traditional small businesses, and high-performing small businesses
are often called _____.

A. main street
businesses
B. Wall Street
businesses
C. high-growth
ventures
D. universal
businesses
51. Which of the following is a reward universally mentioned by entrepreneurs?

A. Peer
admiration
B. Personal
growth

C. Political
power
D. Industry
recognition
52. _____ is a reward universally mentioned by entrepreneurs.

A. Industry
recognition
B. Peer
admiration
C. Political
power
D. Work
flexibility
53. Which of the following is a reward that is rarely mentioned by entrepreneurs?

A. To have a chance to build great
wealth
B. To have greater flexibility for personal and
family life
C. To continue a family
tradition
D. To develop an idea for a
product

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54. _____ rewards are those which people get from facing and beating or learning from
challenges.

A. Recognitio
n
B. Flexibili
ty
C. Incom
e
D. Growt
h
55. Which of the following rewards refer to the money made from owning a business?

A. Growth
rewards
B. Flexibility
rewards
C. Income
rewards
D. Performance
rewards
56. Tina runs her consultancy business from her home. Working from home allows her to
set her own schedule and take time off at her convenience so that she can be with
her family. The fact that Tina gets more time with her family can be categorized as
______ reward.

A. incom
e
B. flexibili
ty

C. growt
h
D. cred
it
57. The ability of business owners to structure their lives in the way that best suits their
needs refers to:

A. flexibility
rewards.
B. family
rewards.
C. growth
rewards.
D. wealth
rewards.

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58. Which of the following is a myth about small businesses?

A. That failed entrepreneurs can succeed if they
try again
B. That a small business will never have enough
financing
C. That students have skills to start small
businesses
D. That small businesses can start during

recession
59. Financing a business online through the collective involvement of others who provide
donations, loans, or investments is referred to as _____.

A. crowdfundi
ng
B. bootstrappi
ng
C. microfinanci
ng
D. crowdsourci
ng
60. Bootstrapping refers to:

A. funding a business online through the collective involvement of others who
provide loans.
B. buying, renting, or leasing a prepackaged business from another
company.
C. inheriting or being given a stake in a family
business.
D. using low-cost or free techniques to minimize the cost of doing
business.
61. Anna helps brides-to-be choose wedding gowns that best suit their requirements and
budget, and also helps them with where they can find the right dress. She has made
her home her virtual office; she does not require external financing. Anna is using
_____ to run her small business.

A. crowdfundi
ng
B. franchisi

ng
C. bootstrappi
ng
D. crowdsourci
ng

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62. According to the BRIE model, which of the following is an element that is necessary to
start a business?

A. Boundar
y
B. Recognitio
n
C. Efficienc
y
D. Incom
e
63. According to the BRIE model, _____ sets up a business as a firm.

A. intenti
on
B. exchang
e
C. franchis
e

D. bounda
ry
64. According to the BRIE model, which of the following sets a firm off from the buying or
selling or bartering done casually by nonmerchants?

A. Resource
s
B. Boundar
y
C. Intenti
on
D. Exchang
e
65. According to the BRIE model, which of the following falls under the boundary
category?

A. The financial resources of a
company
B. The desire to start a
business
C. An e-mail address of the
company
D. A product or service offered by the
company

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66. John owns a small business that does computer servicing. Which of the following
would represent boundary as mentioned in the BRIE model in John's computer
servicing business?

A. The employees that work under
John
B. The office in which John
works
C. The money earned by John from the
business
D. The desire to expand the business to writing
software
67. In the BRIE model, a business name or government registration, a phone or e-mail
address dedicated to the business, or a specific location for the firm in a home,
commercial space, or on the Internet represents:

A. exchang
e.
B. resourc
e.
C. boundar
y.
D. intentio
n.
68. According to the BRIE model, which of the following is true of a resource?

A. It includes a business name or government
registration.
B. It refers to moving goods or services to others for
money.

C. It is the most frequently occurring element of the
BRIE model.
D. It includes the product or service to be
offered.
69. Which of the following is the most frequently occurring element of the BRIE model?

A. Intenti
on
B. Boundar
y
C. Exchang
e
D. Resource
s

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70. Which of the following elements of the BRIE model represents the desire to start a
business?

A. Intenti
on
B. Boundar
y
C. Exchang
e
D. Resource

s
71. In terms of new jobs, which of the following is true of a small business?

A. It does not employ people looking for parttime work.
B. It is of no importance to existing
jobs.
C. It offers jobs to people with atypical work
histories.
D. It pays taxes on behalf of the people it
hires.
72. The way that newly created goods, services, or firms hurt existing goods, services, or
firms is referred to as:

A. benchmarkin
g.
B. creative
destruction.
C. service
distortion.
D. crowdsourcin
g.
73. Mandarin In Town, a Chinese restaurant, opened recently in Burnsville, Minnesota.
People from all over the town flocked to Mandarin to find out how good it was. This
gave a big boost to the restaurant's initial business, but it caused the other
restaurants in the area to lose business temporarily. The way in which Mandarin in
Town hurt existing restaurants in Burnsville is an example of:

A. creative
destruction.
B. service

distortion.
C. innovative
disruption.
D. crowdsourcin
g.
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74. According to the U.S. Small Business Administration, small businesses generate _____
times the number of patents per employee than do big businesses.

A. 3
5
B. 2
C. 1
6
D. 5
0
75. A nation where the major forces for jobs, revenues, and taxes come from farming or
extractive industries like forestry, mining, or oil production is a(n):

A. factor-driven
economy.
B. efficiency-driven
economy.
C. innovation-driven
economy.
D. competency-driven

economy.
76. Which of the following is NOT one of the seven key strategies of the entrepreneurial
way?

A. Scale
back
B. Mindshar
e
C. Bird in the
hand
D. Take it on the
road
77. A nation where industrialization is the major force providing jobs, revenues and taxes,
and where minimizing costs while maximizing productivity is a major goal is a(n):

A. factor-driven
economy.
B. efficiency-driven
economy.
C. innovation-driven
economy.
D. effectiveness-driven
economy.

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78. In efficiency-driven economies:

A. entrepreneurship levels are in the middle
range.
B. entrepreneurship levels are very
high.
C. entrepreneurship levels are very
low.
D. entrepreneurship is not given any
consideration.
79. Innovation-driven economies:

A. are those where entrepreneurship becomes a key way to build the
middle class.
B. are nations where industrialization is becoming the major force providing jobs,
revenues, and taxes.
C. are focused on high-value-added manufacturing but are marked by a very large
service sector.
D. are those where entrepreneurship is essential to build personal wealth and break
the cycle of low-wage jobs.
80. If you don't succeed the first time, try, try again is also called the strategy of
___________.

A. perseveran
ce
B. effectuati
on
C. the corridor
principle
D. crowdsourci
ng

81. Virtual instant global entrepreneurship refers to:

A. the transformation of a high-growth venture into a small
business.
B. a person becoming an owner by inheriting or getting a stake in a
family business.
C. the way that newly created goods, services, or firms hurt existing goods,
services, or firms.
D. a process that uses the Internet to quickly create businesses with a
worldwide reach.

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82. Which of the following aspects of entrepreneurship refers to being in-tune with one's
market?

A. Efficienc
y
B. Creatio
n
C. Customerfocus
D. Growt
h
83. The form of entrepreneurship in which a person or group own their own for-profit
business is referred to as:

A. independent

entrepreneurship.
B. social
entrepreneurship.
C. public
entrepreneurship.
D. corporate
entrepreneurship.
84. _____ is an aspect of entrepreneurship that refers to doing the most work with the
fewest resources.

A. Innovati
on
B. Creatio
n
C. Efficienc
y
D. Customerfocus
85. _____ is an aspect of entrepreneurship which looks at a new thing or a new way of
doing things.

A. Customerfocus
B. Innovati
on
C. Creatio
n
D. Efficienc
y

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86. Which of the following types of entrepreneurship typically concentrates on innovation
and customer-focus among all aspects of entrepreneurship?

A. Public
entrepreneurship
B. Corporate
entrepreneurship
C. Independent
entrepreneurship
D. Social
entrepreneurship
87. Which of the following is true of corporate entrepreneurship?

A. It involves the creation of self-sustaining charitable and civic
organizations.
B. It involves revitalizing government
agencies.
C. It is a form of entrepreneurship in which people own their own forprofit business.
D. It involves bringing new products or services to a
market.
88. Social entrepreneurship primarily involves a person or group:

A. creating new charitable and civic organizations which are financially
self-sufficient.
B. bringing new products or services to
market.
C. owning their own for-profit

business.
D. revitalizing government
agencies.
89. Which of the following is true of social entrepreneurship?

A. It usually has a lot of
funding.
B. It creates organizations which are usually financially dependent on
other firms.
C. It cannot be initiated by a for-profit
company.
D. It does not include innovation as a key
element.

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90. _____ is the degree of attention a target market pays to an idea or organization.

A. Crowdfundi
ng
B. Effectuati
on
C. Mindshar
e
D. Crowdsourci
ng
91. Effectuation refers to:

A. the degree of attention a target market pays to an idea or
organization.
B. an approach used to create alternatives in uncertain
environments.
C. transforming a high-growth venture into a small
business.
D. a process of a person becoming an owner by inheriting or getting a stake in a
family business.

Essay Questions
92. What is the difference between small businesses and high-growth ventures?

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93. Briefly describe the three universally mentioned and four rarely mentioned rewards.

94. What are the most common myths about small businesses? What are the facts that
contradict these myths?

95. Briefly describe the BRIE model.

96. What is the role of small businesses in creating new jobs?

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97. What is creative destruction?

98. Most new small firms go through a similar startup process and the most successful
firms follow a four-step process. Name and give a brief description of each of the four
steps.

99. What is VIGE? Explain.

100 Identify and briefly describe four of the seven key strategies of the entrepreneurial
.
way.

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101 What are the different forms of entrepreneurship?
.

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Chapter 01 Small Business: Its Opportunities and Rewards
Answer Key
True / False Questions

1.

The majority of new firms go through similar startup processes with those most
likely to be successful following a four-step process: Finance, Construct, Promote,
Demonstrate.
FALSE
The four steps in the entrepreneurial process are feel, check, plan, and do.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 01-01 Understand the scope of small business in the United States.
Level of Difficulty: 1 Easy
Topic: Starting an Entrepreneurial Small Business: Four Key Ideas

2.

The three most popular types of rewards for small business owners are personal
growth, building wealth, and creating products.
FALSE
The three most popular types of rewards for small business owners are growth,
flexibility, and income.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 01-03 Discover the rewards entrepreneurs can achieve through their businesses.
Level of Difficulty: 1 Easy
Topic: Rewards for Starting a Small Business

3.

In order to make profits from a small business, the company needs to make an
actual product.
FALSE
This is one of the myths listed in the text. In actuality, 9 of the 10 most profitable
industries for small businesses involve services such as dentists, tax preparers and
lawyers.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 01-04 Dispel key myths about small businesses.
Level of Difficulty: 1 Easy
Topic: Myths about Small Businesses

1-24
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4.

Truly entrepreneurial businesses are characterized by imitativeness in their
products, services, or business models.
FALSE
Truly entrepreneurial businesses are characterized by novelty, in their products,
services, or business models.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 01-01 Understand the scope of small business in the United States.
Level of Difficulty: 1 Easy

Topic: Entrepreneurs Are Everywhere

5.

Self-employed persons are not referred to as entrepreneurs.
FALSE
The self-employed, anyone who works for himself or herself instead of for others,
is also an entrepreneur. According to the Census Bureau, there were about 15.5
million self-employed people in 2015.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 01-01 Understand the scope of small business in the United States.
Level of Difficulty: 1 Easy
Topic: Entrepreneurs Are Everywhere

6.

Crowdsourcing is the degree of attention your target market pays to your idea or
organization.
FALSE
This is the definition of mindshare. Crowdsourcing is techniques often based on
Internet-based services to get opinions or ideas through the collective involvement
of others.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Learning Objective: 01-07 Recognize the seven key strategies of the entrepreneurial way.
Level of Difficulty: 1 Easy
Topic: Challenge and the Entrepreneurial Way

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